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From love to hate one step. Currently at the height of popularity of the franc, the yen and the Euro reacted with a friendly snowball's message about monetary policy easing by the people's Bank of China. Basic interest rate was reduced from 4,85% to 4.6%, the Deposit rate is from 2% to 1.75%, the specification of deductions in Fund of obligatory reserves — from 18.5% to 18%. It is obvious that monetary expansion should lead to the devaluation of the national currency, however, it is the gradual weakening, because according to the words of the Chairman of the state Council Li Keqiang, the fundamentals of the economy have not changed, the reason for the continuous devaluation is not, and Beijing is able to keep the rate at an acceptable level. Verbal intervention, coupled with traditional at the end of the Asian session PBOC intervention suggest that the developments in the domestic foreign exchange market of China, are less important than the collapse of the stock market.
In fact, we saw a rehearsal of what should happen, only the peak Shanghai Composite will be able to suspend. Earlier, European and American paper followed by China, however, the fact that the decline in rates occurred after the close of trading in Asia gave them an excuse for action ahead of the curve. The growth of the DAX, EuroStoxx and S&P500 and the associated subsidence courses reliable currencies were hoping for a similar reaction of the stock indices of China. It did not, which allowed the yen, the franc and the Euro to stay on his feet. Shanghai Composite went for a ride on a roller coaster and closed the day in negative territory, while not knowing how to respond to the rumors about the change of the vector of market support from the PBOC. According to Bloomberg, the Central Bank stopped providing liquidity as market makers, preferring to move from a barbaric to traditional measures. The opinion of the official Beijing were divided: some believe that the costs are too high, and there is no result; the latter believe that the drop in the price of paper creates a huge risk for the banking system.
As if there was not, but the rehearsal took place. Obviously, for the growth of the Euro no fundamental reasons, and its current strengthening is the result of closing positions hedge funds, ETFs and carry traders. Endlessly this process can not continue. According to the Vice-President of the ECB Vitor Constancio, the ECB is prepared to take additional measures, if you see further risk to inflation. It is clear that a 10% appreciation of the Euro from March to August, the collapse of prices in the oil market and the sluggish dynamics of the GDP of the Eurozone these risks increase. On the other hand us data continues to delight. This is evidenced by the July the acceleration of sales in the primary real estate market and growth in the August consumer confidence to its highest level in seven months. The number of people confident in the easy work is constantly growing, which is further confirmation of the strength of the labour market.
In fact, we saw a rehearsal of what should happen, only the peak Shanghai Composite will be able to suspend. Earlier, European and American paper followed by China, however, the fact that the decline in rates occurred after the close of trading in Asia gave them an excuse for action ahead of the curve. The growth of the DAX, EuroStoxx and S&P500 and the associated subsidence courses reliable currencies were hoping for a similar reaction of the stock indices of China. It did not, which allowed the yen, the franc and the Euro to stay on his feet. Shanghai Composite went for a ride on a roller coaster and closed the day in negative territory, while not knowing how to respond to the rumors about the change of the vector of market support from the PBOC. According to Bloomberg, the Central Bank stopped providing liquidity as market makers, preferring to move from a barbaric to traditional measures. The opinion of the official Beijing were divided: some believe that the costs are too high, and there is no result; the latter believe that the drop in the price of paper creates a huge risk for the banking system.
As if there was not, but the rehearsal took place. Obviously, for the growth of the Euro no fundamental reasons, and its current strengthening is the result of closing positions hedge funds, ETFs and carry traders. Endlessly this process can not continue. According to the Vice-President of the ECB Vitor Constancio, the ECB is prepared to take additional measures, if you see further risk to inflation. It is clear that a 10% appreciation of the Euro from March to August, the collapse of prices in the oil market and the sluggish dynamics of the GDP of the Eurozone these risks increase. On the other hand us data continues to delight. This is evidenced by the July the acceleration of sales in the primary real estate market and growth in the August consumer confidence to its highest level in seven months. The number of people confident in the easy work is constantly growing, which is further confirmation of the strength of the labour market.
